Weird high Hubzu bid

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Weird high Hubzu bid

Simon Stahl
Rental Property Investor · Oakland, CA · Member since 2016 · 268 posts · 106 votes

Hi

I was bidding on a property on hubzu when someone places a weirdly high bid. I'll use random numbers to explain, but the principle is the same. I had the highest bid of 120k. I assume that the reserve is around 150k, because that is the price that the property is listed on the MLS. Someone overbid me with 121k, then the same person with 122k, and then someone else came in with 170k right away. The first two came in within one minute of each other, the super high one came in two minutes later. Non of them was an autobid. I think that is really weird. 170k seems to be like a very optimistic number to still make a profit on that property, but it might be possible IMHO.

What I wonder is, why would someone go that high right away? It would make sense to bid around 150k and enable autobid with the max, but why go in with that high number right away?

One thing I thought of was that someone might try to pull something funny off here. He might have had the highest bid at 122k, then used a different account to place that high bid, so no one else would bid anymore. Then right before the deadline, he revokes his high bid and hopes to win with his 122k bid. But that is really just speculation from my side.

Anyone has ever dealt with a scenario like that? Any idea what could be going on here?

Simon

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Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
9y

Hi @Simon Stahl,

CONSPIRACY THEORY TIME!!!

  • The $170k guy and the $122k are the same person. The $170k "person" will never deliver, so it'll go to the $122k person.
  • The $170k fake account (or a 'buddy doing a solid' for the $122k guy) will not deliver, but it WILL make this property fly under the rader of others.
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  • Marian Smith
    Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
    9y
    Doesnt make sense...unless someone meant to place it on autobid with a ceiling of 170k and formulated it wrong...I havent been on the site in years so not sure if that could happen. I won a bid once and was very mistrustful that I was bidding against someone who could actually close. Do they still allow basically anyone with email to bid?
    0Reply
  • Simon Stahl
    OP
    Rental Property Investor · Oakland, CA · Member since 2016 · 268 posts · 106 votes
    9y

    Yes, that could very well be the case here. I think it's probably hard to mess up an auto bid, but it could definitely be some kind of troll that just want to have a good laugh. It took me literally 2 minutes to sign up. All they wanted was my name, address and the last 4 digits of my SSN, and I was good to go. 

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    9y

    Hi @Simon Stahl,

    CONSPIRACY THEORY TIME!!!

    • The $170k guy and the $122k are the same person. The $170k "person" will never deliver, so it'll go to the $122k person.
    • The $170k fake account (or a 'buddy doing a solid' for the $122k guy) will not deliver, but it WILL make this property fly under the rader of others.
    2Reply
  • Mark Fedorov
    Allentown, PA · Member since 2014 · 264 posts · 120 votes
    9y

    The other thought (though conspiracy theories have their merit) is that the 170 bid knows more (or thinks they do) about the property then you do, perhaps a neighbor or relative, and thinks they can make money at 170....

    0Reply
  • Account Closed
    Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
    9y

    @Simon Stahl   To me it simply sounds like the last two bids were auto bids.  That caused the big skip when the last bid came in, because it had to be large enough to beat the maximum bid of the other bidder.

    0Reply
  • Simon Stahl
    OP
    Rental Property Investor · Oakland, CA · Member since 2016 · 268 posts · 106 votes
    9y

    Yes @Chris Mason, I had the same thoughts! We will see when the auction is over if the highest one will flunk out or not. 

    @Mark Fedorov But why go in so high right away? Why not place a lower bid first and enable autobid with the 170 as max? At least that is what I would do if I was the one... I mean, don't we all rather pay less than more?

    @Account Closed Nope, autobits are marked as that and none of those bids is. They were all manual.

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  • Simon Stahl
    OP
    Rental Property Investor · Oakland, CA · Member since 2016 · 268 posts · 106 votes
    9y

    Hmm, one more interesting thing is that this hight bid prevents any real bids to be made. No new bids can be made below the current highest bid, so basically no one can bid anymore until this fake scam bid (allegedly) is withdrawn.

    1Reply
  • Sean Cole
    Investor · Cincinnati, OH · Member since 2012 · 506 posts · 331 votes
    9y
    If the $170k bidder thinks that's a legit price to pay or would be willing to pay a bit more than that, they could very well make that bid to drive other people away. I've done it before. Makes people think you really want the property.
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  • Simon Stahl
    OP
    Rental Property Investor · Oakland, CA · Member since 2016 · 268 posts · 106 votes
    9y

    @Sean Cole Sure, but then you actually have to pay that high price when you probably could have gotten it for 20k less... Yea, I mean, if it's some rich dude that just really wants that property, I guess I'll stand no chance.

    Btw: I've contacted the Hubzu support and they said that they cannot do anything about it. They can close the account if it is obviously fake, but besides that they won't do anything. Best thing I can do to talk to the listing agent and let him know that my max prize would be higher then the next bid in line.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    9y

    When I bid on Hubzu, I do not do small incremental bids. I bid over by larger amounts because I dont have the time to sit there and make 50 different bids to get a property I want.  

    [email protected]301-893-4635Podcast Guest on Show #192
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  • Simon Stahl
    OP
    Rental Property Investor · Oakland, CA · Member since 2016 · 268 posts · 106 votes
    9y

    @Russell Brazil just wondering: why don't you use the auto increment bids? I'm sure you could save a few thousand here and there that way and you would still not have to sit there all the time and increment your bid.

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    9y
    Originally posted by @Simon Stahl:

    @Russell Brazil just wondering: why don't you use the auto increment bids? I'm sure you could save a few thousand here and there that way and you would still not have to sit there all the time and increment your bid.

     Because if I'm using an auto implement bid it's going to work against me. It's going to keep more people in the bidding process who think, oh I'll just bid another 1 or 2 thousand and keep them in the game. If I go in and bid 20 or 30 thousand higher, most of the bidders are going to drop out of the bidding process, and I'll probably end up paying less in the end than if I keep 10 or 15 other bidders engaged by thinking they can just go up another small amount.

    If I want the property, 5 or 10 grand isn't going to be the deciding factor on whether I want it or not, so I'll just figure out what I'm willing to pay and bid it up close to that, usually under, but not enough to play a game.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    1Reply
  • Sean Cole
    Investor · Cincinnati, OH · Member since 2012 · 506 posts · 331 votes
    9y

    Russell is exactly right and it's the same point I was making.  As you're demonstrating, it's a big difference psychologically to go up $20,000 by $1,000 chunks than to go in 1 chunk.  There's so many people on Hubzu that you're not going to steal a property so why try?

    1Reply
  • Simon Stahl
    OP
    Rental Property Investor · Oakland, CA · Member since 2016 · 268 posts · 106 votes
    9y

    Thanks @Russell Brazil and @Sean Cole. It looks like that is what actually happened. It even got overbid at least two more times. So at the end it looks like either I don't know something that is going on with that property, or I am just really really bad in calculating rehab costs and ARVs... I went there yesterday to see it and the agent also thought the bids were way too high. Well, I'll have to wait until it's sold to know exactly how much they payed for it.

    0Reply
  • Sean Cole
    Investor · Cincinnati, OH · Member since 2012 · 506 posts · 331 votes
    9y

    @Simon Stahl, the other option is that the other bidders are incorrectly assuming different numbers than you or they have a different use in mind (perhaps owner-occupant without the same profit need).

    1Reply
  • Peter Thomas
    Investor · Thousand Oaks, CA · Member since 2016 · 14 posts · 1 vote
    9y

    I think there are a lot of Hubzu bidders who bid first and view the property second....which contributes to the immense amount of wasted time trying to win a Hubzu property.

    0Reply
  • Simon Stahl
    OP
    Rental Property Investor · Oakland, CA · Member since 2016 · 268 posts · 106 votes
    9y

    That really sucks! Well I'm keeping an eye on it, just out of curiosity. The highest bid at the end of the auction is already gone. I can tell by the amount it recommends for a backup bid. 

    Haha, two or three more guys flunk out like this, I'll get it for a good price ;-)

    0Reply
  • Simon Stahl
    OP
    Rental Property Investor · Oakland, CA · Member since 2016 · 268 posts · 106 votes
    9y

    In case someone is wondering what has happened to this property: Apparently none of those high bidder knew the real value of it. All of them decided to chicken out and the property is back on hubzu for sale again. This time they bid even higher than last time with still 6 days left in the auction.

    My takeaway from this is that hubzu is seriously flawed. If everyone can just throw in bids and is then not hold liable for them, the system does not work. I don't think any of those bidders have ever actually seen the property. If they had, they would know that is it only worth half of what they are bidding.

    2Reply
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